An Industry Is Born: Closeup Of 5 Years of Film Tax Credits

November 17, 2012|Dan Haar

David Duchovny, Timothy Hutton and Hope Davis have been filming a movie for the past month in Greenwich, the real-life story of a family that built a children's hospital after their daughter died of rabies.

It is not the spectacle it might have been five years ago.

Compared with the stir caused by Harrison Ford filming an Indiana Jones movie in New Haven or Leonardo DiCaprio and Kate Winslet traipsing through Fairfield County a few years back, "After the Fall" hasn't created much buzz.

Maybe its status as a smaller-budget, independent film, the blasé attitude in Greenwich and the fact that the project hasn't taken over downtown are factors.

But beyond that, perhaps we've come to the point where Hollywood doing business in the Land of Steady Habits is just that — another day at the office.

Chalk that up as a success for the state's film, TV and digital media tax credit. Five years after the program offered its first bounties, a detailed look at the $364 million in payouts shows that a sports and entertainment media industry is now firmly ensconced here, proving early skeptics wrong. In the first nine months of 2012 alone, production companies earned $85 million worth of the credits.

Is it worth the cost to taxpayers? Is there even a cost to taxpayers at all? The short answers are "probably," and "sometimes," but we don't know for sure because there's no public study of the numbers.

What is apparent is that movie stars are just a sideshow at this party. Three companies — Blue Sky Studios, ESPN and World Wrestling Entertainment — snagged $155 million, or 43 percent, of the entire program from the first payout in August 2007 through September of this year.

At least 23 feature films have tucked into $1 million or more in state tax credits, with the award for biggest outlay to a feature film going to — the envelope please — Robert DeNiro and Al Pacino in "Righteous Kill" (2008), for $12.5 million. (Applause.)

"Righteous Kill" comes in at No. 7 overall. After Blue Sky, ESPN and WWE, a trio of TV studios garnered a total of $45 million for shows such as Jerry Springer, Maury Povich and "Are We There Yet?"

When we see one project lead to another, that's the sign of a real industry. The best example of that was the 2009 move of "The Jerry Springer Show," "Maury" and then "The Steve Wilkos Show" to the Stamford Media Center & Productions studio. Because of connections to NBC, the success of that venture led to NBC Sports moving its headquarters and studio operations to Stamford.

"That's the kind of thing that the tax credits are helping us to do," said George Norfleet, head of the state's Office of Film, TV and Digital Media, which manages the tax credits and works with production firms eyeing the state.

The remainder of the list is a smaller mix of projects, many locally based, and that's the whole point. Put it all into a package, and there's a powerful cluster of activity. It's all the more distinct since this engine has a specialty, sports and entertainment on TV and digital platforms. And it's largely based in Fairfield County.

"There is no doubt that the program is creating a bona fide, novel industry … that wasn't here before," Norfleet said.

'TV Is Our Bread And Butter'

So we've bought ourselves an industry. The $364 million in credits, which companies can sell if the credits exceed their state tax bills, rewarded $1.3 billion worth of activity.

Like biotech, another industry the state is spending heavily to woo, the entertainment media industry doesn't come cheap. Between the two, the entertainment play is less costly, considering that we're paying more than $1 billion for the medical research complex in Farmington alone.

But the economic benefits of entertainment media are less clear, because many of the people working in the business are transient — starting with movie stars and directors — and because every eligible project spending more than $1 million requires a 30 percent payoff in tax credits.

From the start, the goal was to develop a "bricks and mortar" industry, because, clearly, the payoff for the state is higher if permanent jobs are here. A Hollywood film production parachuting in, complete with caterers from New York, doesn't cut it. That's been one of the main criticisms of this and similar programs across the country as states put out the red carpet with green fringe.

Among other problems, if a production doesn't create local jobs, the only gains we have are the taxes that it pays and the goods and services it buys — all nice, but it's hard to make it balance the millions of dollars some of these big-screen cavalcades are costing us.